4 Characterisitics of Innovative organizations

The Management of InnovationDespite the interest in the field of innovation, much of the research evidence concerning management practices about innovation cultures and creative climate remains unsystematic and anecdotal. As mentioned earlier, the importance of culture has been emphasized by organizational theorists such as Burns and Stalker (1961), who present a case for organic structures as opposed to mechanistic structures. In popular literature, Peters and Waterman (1982), similarly present arguments, which suggest that in order to facilitate innovation, work environments must be simultaneously tight and loose. 

Burlgeman and Sayles (1986) highlight the dependency of innovation with the development and maintenance of an appropriate context within which innovation can occur. Judge et al. (1997) in presenting findings from a study of R&D units compare cultures and climates between innovative and less-innovative firms and argue that the key distinguishing factor between innovative and less innovative firms is the ability of management to create a sense of community in the workplace. Highly innovative companies behave as focused communities whereas less innovative companies units behave more like traditional bureaucratic departments. They suggest four managerial practices that influence the making of such goal-directed communities.
1. Balanced Autonomy
Autonomy is defined as having control over means as well as the ends of one’s work. This concept appears to be one of central importance. There are two types of  autonomy:
  • Strategic Autonomy: the freedom to set one’s own agenda;
  • Operational Autonomy: the freedom to attack a problem, once it has been set by the organization, in ways that are determined by the individual self.
Operational autonomy encourages a sense of the individual and promotes entrepreneurial spirit, whereas strategic autonomy is more to do with the level of alignment with organizational goals. It appears that firms that are most innovative emphasize operational autonomy but retain strategic autonomy for top management. Top management appears to specify ultimate goals to be attained but thereafter provide freedom to allow individuals to be creative in the ways they achieve goals. Giving strategic autonomy, in the sense of allowing individuals a large degree of freedom to determine their destiny, ultimately leads to less innovation. The results of strategic autonomy are an absence of guidelines and focus in effort. In contrast, having too little operational autonomy also has the effect of creating imbalance. Here the roadmaps become too rigidly specified, and control drives out innovative flair, leading eventually to bureaucratic atmospheres. What works best is a balance between operational and strategic autonomy.
2. Personalized Recognition
Rewarding individuals for their contribution to the organization is widely used by corporations. However, while recognition can take many forms there is a common distinction: rewards can be either extrinsic or intrinsic. Extrinsic rewards are things such as pay increases, bonuses and shares and stock options. Intrinsic rewards are those that are based on internal feelings of accomplishment by the recipient. For example, being personally thanked by the CEO, or being recognized by the peer group, being awarded an award or trophy.
Innovative companies appear to rely heavily on personalized intrinsic awards, both for individuals as well as groups. Less innovative companies tend to place almost exclusive emphasis on extrinsic awards. It appears that when individuals are motivated more by intrinsic desires than extrinsic desires then there is greater creative thought and action. Nevertheless, it has to be stated that extrinsic rewards have to be present at a base level in order to ensure that individuals are at least comfortable with their salary. Beyond the base salary thresholds it appears that innovation is primarily driven by self-esteem level rather than external monetary rewards. It appears that extrinsic rewards often yield only temporary compliance. Extrinsic rewards promote competitive behaviours, which disrupt workplace relationships, inhibit openness and learning, discourage risk-taking, and can effectively undermine interest in work itself. When extrinsic rewards are used, individuals tend to channel their energies in trying to get the extrinsic reward rather than unleash their creative potential.
3. Integrated Socio-Technical System
Highly innovative companies appear to place equal emphasis on the technical side as well as the social side of the organization. In other words, they look to nurture not only technical abilities and expertise but also promote a sense of sharing and togetherness. Fostering group cohesiveness requires paying attention to the recruitment process to ensure social “fit” beyond technical expertise, and also about carefully integrating new individuals through a well-designed socialization programme. Less innovative firms on the other hand appear to be more concerned with explicit, aggressive individual goals. Less innovative firms tend to create environments of independence, whereas innovative ones create environments of cooperation. Highly innovative companies also appear to place much more reasonable goal expectations, and try not to overload individuals with projects. The prevalent belief being that too many projects spread effort too thinly, leading individuals to step from the surface of one to the next. These conditions create time pressures, which militate strongly against innovativeness.
4. Continuity of Slack
Slack is the cushion of resources, which allows an organization to adapt to internal and external pressures. Slack has been correlated positively to innovation. Judge et al. (1997) note that it is not just the existence of slack but also the existence of slack over time that appears to have positive impact upon innovation. They find less innovative firms have slack but these firms appear to have experienced significant disruptions or discontinuities of slack in their past or were expecting disruptions in the future. Therefore innovativeness seems to be linked with both experience and expectations of slack resources. It can be hypothesized that slack, and future expectations of uninterrupted slack, provide scope for the organization and its members to take risks that they would not take under conditions of no slack, or interruptions in slack. Organizationally, this would appear to indicate the need for generating a base-line stock of slack in a variety of critical resources (such as time and seed funding for new projects).